Forex / Currency Basics
Synopsis
Basically banks, insurance companies, large corporations and financial institutions are the players in the forex market exchange. However of late, individual investors either working for themselves or for a small group also seem to make quite an impact on the forex trading platform. All these transactions are done through the buying and selling exercise which is done according to real time market rates available.
The Basics
The value of each currency involved in the transaction is expressed in terms of the other paired one. This enables the investor to actually view the value as it is depicted through the exchange.
There are usually only two currencies involved in each transaction where one is bought and the other is sold according to the agreed market dictated rate. The base currency is considered the first currency in the pairing and the investor’s account is denominated as this currency. The second currency in the paring is depicted as the terms currency.
The transactions can be done by placing orders through dealer intervention or they can also be done without dealer intervention but through automation execution. This would mean that there are some softwares available where the investor can set it up to function on his or her behalf rather that opting to use the services of an individual who would also charge the corresponding commissions for such actions. However there have been documented cases of the software chosen not being able to function as it was designed to due to external disruptions thus creating eventual losses instead of profits.